|NEW YORK -- Defense contractor Raytheon Co., leaner now
after cutting more than 11,000 jobs and armed with new orders for radar
systems, business jets and missiles, on Thursday said its second-quarter
net income rose nearly 9 percent.
Raytheon (NYSE:RTNa - news) earned $294 million or 86
cents per share, up from 79 cents per share or $270 million, after a gain
of 2 cents per share in the same period a year ago. Sales rose to $5.2
billion from $5.1 billion.
The results matched Wall Street expectations and pushed
up the Lexington, Mass.-based company's stock 69 cents to $72.06 in midday
trading on the New York Stock Exchange.
``This was a solid quarter filled with many more accomplishments
than disappointments,'' Raytheon's Chief Financial Officer Frank Caine
told analysts in a conference call. ``For four quarters in 1998, revenues
were flat to down (but) we feel we have turned an important corner. This
was an important quarter for new contracts.''
In a statement, President and Chief Executive Officer
Daniel Burnham attributed the results to improved profit margins and a
strong performance by the electronics business of Raytheon, which is America's
third-largest defense contractor.
While total sales from its electronics businesses were
flat at $3.8 billion, the cost-saving steps the company has taken helped
boost their combined operating income by 14.5 percent to $555 million
from $426 million a year ago.
Caine said by the end of June, 11,300 jobs had been eliminated
and the company was well on the way to cutting 15,400 positions
by the end of this year, which will leave its total work force at 115,000.
Raytheon boasted a number of major contract wins during
the quarter, adding a total of $6.1 billion in new business. That is up
from new contracts a year ago totaling $4.6 billion and up from $5.2 billion
in the first quarter.
``Raytheon Aircraft secured its largest ever business
jet order when Executive Jet Inc. chose to purchase up to 100 Hawker Horizon
aircraft,'' Burnham said of the light, longer range business aircraft.
Another major contract is from the British Defense Ministry,
which chose Raytheon's Airborne Standoff Radar (ASTOR) program. ASTOR,
which Caine said was worth $1.3 billion to $1.4 billion, is not included
in the $6.1 billion of new contracts in the second quarter.
Raytheon's total backlog at the end of the second quarter
was $24.5 billion. ``We are pleased with the volume of business in the
pipeline,'' said Caine.
Other new contracts include one from the U.S. Navy, with
a potential maximum value of $414 million, for upgraded Tomahawk cruise
missiles; a classified contract by the National Reconnaissance Office
to develop a large multi-element space and ground system; and one from
the Federal Aviation Administration to provide security equipment at 400
U.S. airports and facilities.
Caine noted that 27 percent of Raytheon sales were to
international customers and the company recently closed deals with Greece
and Egypt for military equipment.
Performance at Raytheon's other business lines was not
nearly as robust, however.
Raytheon Engineers & Constructors posted operating
income of $20 million on sales of $650 million compared to an operating
profit of $30 million on sales of $618 million a year ago as the unit's
operating margin slid to 3 percent from 4.9 percent a year ago. The company
said the decline reflects continuing slowdown and project cancellations
in forest products, metals and mining.
At Raytheon Aircraft Co. operating income rose to $75
million on sales of $731 million from $73 million on sales of $639 million.
The 14 percent rise in sales reflected increased demand for mid-size jets,
Separately on Thursday, Raytheon and France's Thomson-CSF
said their Air Command Systems International joint venture had won a North
American Treaty Organization agency contract valued at about $500 million.